Registering your company is like taking that final step towards realizing your dream, and so it's crucial that you are well aware of the nuances -- the why, how, when and where of this cumbersome process --for a hassle-free experience. Below are pointers that should help you along the way.
1. Know the process
The first step towards registering is to obtain a Director Identification Number (DIN) which can be done by filing an e-form on the Ministry of Corporate Affairs' website. You will then need to get your Digital Signature Certificate (DSC) and register the same on the portal (here's the link to do that). Following this, you need to get the company's name approved by the ministry. Once that is done, you can register the company by filing the incorporation form. Irrespective of the type of company you are registering, PAN is a must as an identity proof; your address proof can be a utility bill not more than two months old.
2. Factor in the timeline
There's good news here. There are shorter timelines now. Earlier, it usually took five or more days to register a company but it's turning into a one-day affair.
The government is gradually moving to centralized processing of incorporation proposals at their new centre in Manesar, Gurgaon, instead of relying on the Registrar of Companies (RoC). But since the system still not 100% stable, you need to know the old procedure well. So while you register your company, do remember that there is a quicker procedure awaiting you.
3. Pick the company's category wisely
Your company can be one of the following types:
1) Sole Proprietorship Company (SPC)
2) Partnership Company (PC)
3) One Person Company (OPC)
4) Limited Liability Partnership (LLP)
5) Private Limited Company (PLC).
Registering a Partnership Company is advantageous because the partner can file a case against the firm or against other partners of the firm, and also against third parties by having the PC as one of the parties. The OPC is a better version of SPC, and it gives the benefit of limited liability to the sole founder who's in complete control and is registered with Registrar of Companies (RoC) under the Ministry of Corporate Affairs.
Registering as a Private Limited Company is best for any startup that is hunting for external funds.
However, registering as a Private Limited Company is best for any startup that is hunting for external funds. This is because it is very easy for a PLC to issue fresh equity shares in lieu of the funding received. A private limited company should have capital of at least ₹1 lakh. The registration fee, stamp duty and other charges are a function of company's capital and the state in which the company is being registered.
4. The company's name matters – a lot
It's not for nothing that the government ensures that the name of your business is in agreement with the actual problem you aim to solve. A name that is easy to remember and identify with helps to market your product/services to customers.
In addition, your company's name should be unique; make sure it doesn't resemble the name of any existing company or LLP. The name should not include any word or phrase which is a registered trademark or is in the process of getting there. To make things easier, the public can access the master details of any company registered with Registrar of Companies here or on the MCA's website.
Once you have decided on the unique name, you need to brainstorm more and give four options for the name along with a write-up detailing how the name does full justice to your business. The approval of the name takes a maximum of two weeks.
5. Form INC-29
Company registrations can be burdensome and hence the Ministry of Corporate Affairs has simplified the process through the Integrated Incorporation Form (Form INC-29). How has the process been simplified then? This form combines getting the Director Identification Number (DIN), getting the name approval and filing the incorporation application into one single process, thus significantly reducing the time taken. Other highlights include: no requirement of a second director's DIN anymore, no separate filing of INC-22 (situation of registered office of the company) and no DIR-12 (appointment of the first director) needed. The registration fee is ₹2000 -- a cost over the additional fee that is based on the company capital.